My Predictive Powers

It’s March and that means it’s time for the NCAA tournament, the gauntlet of games that will eventually crown a school the king of college basketball. (The actual coronation won’t take place until April, but the competition is still called March Madness.) So I took last Friday afternoon off and spent the better part of the day watching college hoops. I was particularly interested to see my alma mater, Syracuse University, play and was happy when the team won both of its games last weekend.

Earlier in the week, I had dutifully filled out my bracket on ESPN.com, joining my friends in a group one of them had created. I didn’t have high hopes for my bracket, especially since I’m no basketball expert. But I like the spirit of the competition and filling out the bracket makes watching the games even more fun.

However, I woke up Friday morning to find out that I had called all 16 games of the first day of play correct and was in first place in my friends’ bracket group. I was also ranked pretty high on ESPN.com’s nationwide list of bracket-makers, ranking about 14,000 out of the millions of brackets that had been created.

As the games were played on Friday, Saturday and Sunday my bracket held up quite well. As I write this, I’m ranked #2 among my friends and in the 97th percentile on ESPN.com. And my friends have starting asking me about my basketball team picking strategy, trying to find out how they can duplicate my stellar results.

All I can say is, there’s nothing scientific about it–I usually just go with the higher ranked team, especially in the first few rounds of play and then I default to states or schools that I like. For example, my younger brother always wanted to go to the University of Michigan, so I picked that team over Clemson University, even though Michigan was ranked lower. I also picked Western Kentucky (ranked 12) over the University of Illinois (ranked five) because I have a friend who always speaks highly of that area of the country.

I have Syracuse winning the championship over the University of Connecticut, which is a definite possibility. Syracuse won the tournament when I was in college (way back in 2003) when they were a three seed, which is the team’s rank this year. I’d also just love to see Syracuse crush UConn like they did in the Big East tournament a few weeks ago, as I’m sure most SU fans would, too.

What does this have to do with the stock market? I’m not going to try to make any predictions about whether it’s going to go up or down or sideways because that’s not how we practice investing at Cabot. It’s fun to make guesses in basketball about which team will trump another, but investing is a very different ball game. At Cabot, we don’t make predictions about the stock market. Instead, we watch the market and let it tell us what to do next. The best way to find out what the market is telling us is by having a subscription to Cabot Market Letter, our flagship publication.

Since the last bear market bottom–way back in March 2003, exactly six years ago–the S&P 500 is down 18%, and the Nasdaq has also lost money. But Cabot Market Letter has nearly doubled subscribers’ money–up 95%–during this time! Editor Michael Cintolo does it with spot-on market timing, an eye for finding the very best leading stocks, and a set of proven rules and tools. If you’d like to follow Mike’s proven program, sign up here.

If you’ve been to Cabot’s Web site recently, you may have noticed a new section smack dab in the middle of the home page: Cabot Headline News. In this area, you’ll find two articles compiled from major news sources every weekday. Our goal is try to help you stay better informed about what’s happening in the financial world in a more news-oriented way–making Cabot’s Web site your one-stop shop for financial information. Be sure to check out the Headline News section on the home page and send us any feedback via email or our blog, http://www.iconoclast-investor.com.

Here’s an example of a story I wrote a few weeks ago discussing Warren Buffett’s optimism about the resilience of the U.S. economy and stock market. His positive outlook seems to have permeated other investors’ thoughts in the last few weeks as the stock market has rallied more than 20% off its March 9 low.

“Warren Buffett, the billionaire investor, said that the economy has “fallen off a cliff,” according to CNBC. While Buffett says the economic situation has been “close to the worst case” that he had ever imagined, he thinks the climate would be far worse had the Federal Reserve not stepped in last September.

“Buffett predicted that five years from now, the economy will be much better, with the strength of the U.S. system pulling the country through, just as it has in the past, according to CNBC. Buffett also urged politicians to put aside partisanship when dealing with the economic situation.

“Buffett said that while most banks are in pretty good shape, President Barack Obama should make a “clear statement” in support of the banking system–reassuring people that their money will not be lost if banks fail, CNBC reported.

“Buffett says he still believes (as he stated in a New York Times piece in the fall) that stocks will do better than Treasuries over a 10-year period. But Buffett added that he wasn’t calling the bottom of the stock market then and isn’t calling it now.

“He also reiterated his optimistic long-term view: “Everything will be all right. We do have the greatest economic machine that man has ever created.”

Speaking of Warren Buffett, he’s a follower of Benjamin Graham, whose value investing system has handed investors 20% annualized returns for more than 80 years. And now, Editor J. Royden Ward is using this time-tested system to bring investors the best undervalued stocks in the market–and they’re selling at bargain prices right now.

If you want to safeguard your money and patiently wait for solid stocks to climb higher in price, Cabot Benjamin Graham Value Letter is for you. Editor J. Royden Ward has even called this a once-in-a-lifetime buying opportunity. Don’t wait any longer to get your investments on the right path. Click the link below to get started today.

On Monday, Timothy Lutts got back to basics and gave you five rules to practice for successful growth investing, complete with the reasons why these rules are important. Tim also wrote about the #1 rule: diversification and why not adhering to this principle hurt those who invested solely with Bernard Madoff. Tim finished by writing about a budget airline that he thinks is a great young growth company. Featured Stock: Allegiant Travel (ALGT).

On Thursday, Paul Goodwin wrote about how using Cabot’s growth investing style can help you on your path to retirement, no matter your age. Paul gave you a clever list of criteria you can use to determine where you’re a stock investor. Paul finished by writing about a Chinese software and IT company that recently broke through resistance. Featured Stock: AsiaInfo Holdings (ASIA).

Editor’s Note: Don’t have time to read multiple investment advisories every month? We can help. Cabot Stock of the Month Report ferrets out the best stock across all sectors each and every month, so you don’t have to slog through mountains of information to find the top investment idea. It may be a value stock, Green stock, growth stock, emerging markets stock or momentum stock, but it will always be the best for current market conditions. Cabot Stock of the Month Report gives you exposure to a broad array of sectors and investment styles. Click the link below to get started today.

Cabot Wealth Advisories

We designed Cabot Prime for dedicated investors like you—investors who want to own the best stocks, collect the biggest profits, and lock in a rising source of income for life. With Prime membership, you get full access to nine of our top advisories and many members-only benefits, including free admission to our annual Investors Summit.

Cabot Benjamin Graham Value Investor uses the methods developed by the father of value investing, Benjamin Graham, and popularized by Warren Buffet. A system that works well in all markets, it buys stocks when they're dirt cheap, and sells when they've reached full valuation, a process that takes two years for the average selection. What's important here is buying only when a stock's price is below its Maximum Buy Price, holding through thick and thin, regardless of the news or the action of the stock, and then selling when the stock reaches its Minimum Buy Price. These are great stocks to own if you're a conservative stock investor. Chief Analyst J. Royden Ward explains clearly how to build a portfolio of stocks that meet his strict requirements-plus every issue includes updated rankings on his "Top 275 Value Stocks," so you can check on other stocks you may own.

Cabot Dividend Investor focuses on preparing for retirement, recommending a solid range of income-generating stocks, preferred stocks, REITs, MLPs, closed end funds and utilities, with particular emphasis on risk, dividend safety and dividend growth. If you’re retired or thinking about retirement, this advisory is designed for you. Cabot Dividend Investor’s proprietary Individual Retirement Income System (IRIS) will help you allocate your assets for capital appreciation, current income, growth and future income investments according to your retirement goals.

Cabot Emerging Markets Investor focuses on the emerging markets economies, with special attention paid to the BRIC (Brazil, Russia, India and China) investment landscape. You'll discover the value of international diversification and the profit potential of investing in countries whose economies are growing far faster than that of the U.S. All these stocks are traded on U.S. exchanges, usually as American Depositary Receipts. Under the guidance of Chief Analyst Paul Goodwin, Cabot Emerging Markets Investor was recognized as the top investment newsletter in 2006 and 2007 by Hulbert Financial Digest, and was rated by Hulbert as one of the top investment newsletters in every five-year period 2004 to 2011.

This flagship investment advisory has been published since 1970 and it is recommended for all investors seeking to grow their wealth. You’ll receive invaluable investing lessons, so that you won’t just become a more successful investor—you’ll become a wiser investor!

Cabot Options Trader’s Chief Analyst and options expert Jacob Mintz uses calls, puts and covered calls to guide investors to quick profits while always controlling risk. Beginners and experts alike can benefit from following Jacob’s advice. Whenever Jacob determines the time is right, he sends specific option buy and sell alerts via email and text-message for immediate action. He also sends out a weekly update with his views on the options market, open option positions and his outlook for the coming week.

Cabot Options Trader Pro’s Chief Analyst and options expert Jacob Mintz uses the full spectrum of option strategies to recommend the option that best suits the trade opportunity—calls, puts, spreads, straddles, iron condors and more—while always controlling risk. Whenever Jacob determines the time is right, he sends specific option buy and sell alerts via email and text-message for immediate action. He also sends out a weekly update with his views on the options market, open option positions and his outlook for the coming week.

Cabot Small-Cap Confidential is a limited-circulation advisory for investors seeking profit opportunities in high-potential small company stocks. Each month, small-cap expert and Chief Analyst Tyler Laundon features in-depth research on one outstanding small-company stock that is a pioneer in its field and undiscovered by institutional analysts. Updates on all recommended stocks are sent weekly. The circulation of Cabot Small-Cap Confidential is strictly limited because the stocks recommended are often low-priced and thinly traded. In the publication’s first five years, spanning 2007-2012, the average stock recommendation gained 30.5%.

Cabot Stock of the Week offers the very best of all Cabot stocks across the investing spectrum. Each stock is personally selected by Cabot’s President and most Senior Analyst Timothy Lutts, and guided by the collective wisdom of all the Cabot expert analysts. As a subscriber of Cabot Stock of the Week, you’ll build your wealth and reduce your risk with the single best stock each week for current market conditions among growth, momentum, emerging markets, value, dividend and small-cap stocks.

Designed for experienced investors, Cabot Top Ten Trader is your ticket to fast profits in stocks that are under accumulation now. Every Monday you’ll receive a one-page profile of each recommended stock, including fundamental analysis, technical analysis and buy ranges. Plus... each Friday, Chief Analyst Michael Cintolo will give you an update titled "Movers & Shakers," so you’ll always know his latest thoughts on these fast-moving stocks. Cabot Top Ten Trader is your best source of advice on investing in the market’s hottest stocks.

Yes, you can have Growth AND Value! Combining both growth and value in her growth-at-a-reasonable price strategy, Chief Analyst Crista Huff uncovers stocks with strong growth catalysts that are selling at attractive valuations—the stocks that are temporarily overlooked by mainstream analysts and institutions. Crista applies her stringent screens to deliver the best stocks in three portfolios: Growth, Growth & Income, and Buy Low Opportunities. A subscription includes monthly issues with weekly updates, special bulletins with market and stock alerts and email access to Crista.

Wall Street’s Best Dividend Stocks presents the best income investments from the top Wall Street analysts, researchers and advisors. Editor Nancy Zambell scours more than 200 advisories and research reports to select the top recommendations. Dividend recommendations include high yield, growth and income, REITs, mutual funds, ETFs and more. One Spotlight Stock is featured each month, along with Nancy’s insight on the market and updates on past recommendations. One top recommendation arrives in your email box each morning, and then gets collected into an easy-to-read digest of 30 to 35 top recommendations each month.

Editor Nancy Zambell scours more than 200 advisories and research reports to select the top recommendations by the top analysts. Selections run the full range of opportunities: growth stocks, value stocks, technology, small-caps, biotech, pharmaceuticals, mutual funds, ETFs and more. One Spotlight Stock is featured each month, along with Nancy’s insight on the market and updates on past recommendations. Thirty-plus recommendations are delivered to you in Daily Alerts directly to your email box, and collected in an easy to read digest each month.

Reviews

"Thank you Paul for providing a very concise and profitable advisory. I have tried a few other subscriptions and none compare."

-R. Bruce, Vancouver, Canada

Market Update

From Cabot Dividend Investor

The market continues to lean bullish, with warning signs. While the Dow has been hitting all-time highs, the S&P has gone nowhere for two weeks and the Nasdaq has actually lost ground. Investors seem to be deserting “risk-on” assets, leading to underperformance in the Russell 2000 (IWM) and high-growth sectors including Semiconductors (SMH) and Biotechs (XBI).

On an individual stock level, earnings reactions have been leaning negative. Companies that disappoint are punished severely, while companies that beat are rewarded weakly, if at all.

Meanwhile on the fixed income side, Friday’s hot payrolls report increased inflation expectations and drove bond yields higher over the weekend. But yesterday’s North Korea panic drove investors out of stocks and into conservative assets, driving bond yields lower once again. “Risk-off” classes, including utilities, benefited.